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SIFMA SmartBrief

July 6, 2012

Morning Bell

MSRB moves to bar dealers from altering bond documents
The Municipal Securities Rulemaking Board is working on rule changes that would largely prevent municipal bond dealers from consenting to bond document alterations. Leslie Norwood, co-head of SIFMA's muni securities unit, said the organization appreciates the difficulty the MSRB faces in balancing various market needs and its "thoughtfulness" in reviewing the situation. The Bond Buyer (free content) (7/5)

Industry News

OCC says banks are exposed to higher risk due to securities holdings
The Office of the Comptroller of the Currency released a report outlining how the biggest national banks have become exposed to "inappropriate risk" due to their increased holdings of securities amid unusually low interest rates. "As net interest income has declined, non-interest income faces ongoing pressures from legislative, regulatory, and market changes that have depressed fee income, servicing and securitization income, and may restrain future trading revenue," according to the report. "These pressures are most intense at the largest banks, though smaller banks also feel the effects." Bloomberg (7/5)

Court upholds decision in favor of Bayou Group creditors
A federal appeals court upheld a lower court's arbitration decision against Goldman Sachs Group in favor of Bayou Group's unsecured creditors. Goldman objected to the $20.6 million award in a case where the hedge fund's creditors said the bank's execution and clearing unit ignored signs of fraud at another fund, which imploded in 2005. SIFMA raised concerns about the arbitration ruling in a friend-of-the-court brief, saying it would "divert the focus of clearing firms from their public-policy-mandated task to clear and settle" trades they handle daily. The Wall Street Journal (7/5) OnWallStreet.com (7/5)

U.S. regulator approves NYSE Euronext's retail trading platform
The Securities and Exchange Commission approved NYSE Euronext's bid to launch in August a trading platform intended to lure more retail investors and reverse the exchange's market-share decline. "This moves us in the direction of leveling the playing field," Executive Vice President Joe Mecane said. "It gives us the ability to replicate and compete with what happens outside of exchanges as well as an additional pool of liquidity that will be available to give retail orders a better price." Some large brokers, however, are voicing concern about the effort. Financial Times (tiered subscription model) (7/6) Bloomberg Businessweek (7/6) The Wall Street Journal (7/4)

U.S. unemployment claims fall but private hiring climbs
Jobs data for the U.S. economy show slight improvement on recent dismal numbers but offer scant hope of an unemployment turnaround. New jobless claims decreased 14,000 last week while the private sector added 176,000 jobs in June. The key June Labor Department unemployment figure is due today. Los Angeles Times (tiered subscription model)/Money & Co. blog (7/5) Reuters (7/5) Bloomberg (7/5) Reuters (7/5)

Washington Roundup

Barclays' Libor deal might affect how rates are set
Barclays' settlement with the Commodity Futures Trading Commission regarding possible manipulation of the London Interbank Offered Rate could affect the way benchmark interest rates are determined. Financial Times (tiered subscription model) (7/5)

SEC is expected to push back decision on shift to IFRS
The Securities and Exchange Commission has been considering whether to switch to International Financial Reporting Standards for more than two years. The SEC staff is poised to issue a final report on the global accounting rules, but it likely won't recommend whether or how commissioners should change to IFRS. The staff will eventually make such recommendations, but a timetable has not been set, suggesting further delays. The Wall Street Journal (7/5)

House panel will focus on Dodd-Frank issues
The House Financial Services Committee is planning to scrutinize the Dodd-Frank Act in July. "With this month marking the second anniversary of passage of the Dodd-Frank Act, the Financial Services Committee is focusing attention throughout July on the burdens this law's 2,300 pages and more than 400 new rules layer on American companies, financial markets and consumers," committee Republicans said. Learn more at SIFMA's Dodd-Frank Resource Center. The Hill/Floor Action Blog (7/5)

SEC names Champ as head of investment management division
Norm Champ, deputy director of the Securities and Exchange Commission's examinations program, has been tapped to replace Eileen Rominger as head of the agency's investment management division. The move comes as SEC commissioners review a plan by the unit to overhaul regulations of the money market fund industry. SEC.gov (7/5) Reuters (7/5) The New York Times (tiered subscription model)/DealBook blog (7/5)

Other News

Trio of major central banks loosen monetary policy
The Wall Street Journal (7/5)

Asset/Wealth Management Report

Advisers take along billions in assets when switching firms
Experienced financial advisers managing large portfolios increasingly are leaving their firms because of frustration with policies imposed by parent banks, taking assets under management with them. This year, more than $59 billion in assets have moved as they followed advisers to a different company. Reuters (7/5)

SIFMA News

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SmartQuote

Courage is going from failure to failure without losing enthusiasm."

--Winston Churchill,
British prime minister